Opinion: The Fiscal Outlook for the Jersey Shore

The following op-ed feature is from Phil Rogers of Cape May:

Our shore  areas have declining and aging populations,  increasing cost of services, and no significant industry prospects. The recent suggestions by a Stockton academic are, unfortunately, those that look backwards and provide no accommodation for the inevitable changes in financial or physical environments.  The always mentioned principal solutions are means to increase tourism, and real estate development. Meanwhile supposedly forward thinking proponents suggest  “Green industries”, organic farming, and viniculture. One can observe that, regrettably in the past the only significant local industries were farming and fishing, professions now long past their heydays and not something that can be counted on to positively affect the budgets of the county & many municipalities.

A second consideration are the significant local pressures exerted to finds ways to increase revenue streams on those traditional paths related to tourism . It is clear that thousands of hard-working people have everything invested into those paths and see governmental assistance as the best means to maintain their livelihood, homes and businesses. Unfortunately with respect to the shore area tourism can be translated as ice cream, t-shirts, boardwalk, room rentals , real estate, construction, and a fading gaming industry in Atlantic City.  The problem of those options is that they are finite resources with constraints which can be summed as land, infrastructure (sewerage/municipal waste) and potable water.

To be blunt beach areas have run out of space in which to put new housing, factor in DEP restrictions and the impending state/FEMA requirements and it is most probable that any significant development will be negatively impacted by increasingly expensive infrastructure costs, and additionally indicates that the idea of building enough places to positively affect municipal budgets is in the long term fiscally irresponsible.

Then there is that small matter of drinking water. Cape May City already operates a desalination plant so limits of withdrawal are impending for other shore communities whether they admit that or not! If Shore areas run out of water nothing else will matter – it is OVER! 

A major consideration that affects budgets is the calendar because there is such a short time in which to capture the discretionary revenue from 2nd home owners and tourist populations. Other negative factors are: rising gas & tolls; housing availability & costs; emergence of competition from formerly non-competitive resort communities (Rehoboth DE, Ocean City MD, Outer Banks etc.)

Returning to the subject of the earlier offered possibilities, “green industries” cannot compete with off-shore manufacturing, while wind farms and solar fields do not generate much in the way of sustaining employment.   As for organic farming , the person suggesting that probably has no experience with the amount of work needed to run any farm much less an organic one. With small profit margins,  competition among food retailers who work on a 1% to 3% profit margin, and the consideration that it is very unlikely that vacationing tourists will spend time choosing healthy, but expensive organic vegetables, are factors that work against organic farming having any significant impact on local budgets.

Viniculture is a lovely cottage industry, but that is principally enabled by the farmland preservation act which relieves those businesses of property tax burdens and negatively affects the municipalities’ budgets.  Add the consideration that the wine business is ferociously competitive and the conclusion can only be that it will not positively impact local governmental revenues in any significant manner.

So the question remains - what to do about this not very promising financial outlook? A pontificating answer is to think out of the box, a suggestion that is singularly unhelpful as it does not provide any tangible solutions.

The assertion here is that better solutions do not lie in any of the accepted businesses, or in options impacted by previously mentioned constraints. For example, there is another geographic entity that has many of the same types of problems and constraints as affect the Cape May County area.  A formerly booming tourist trade was negatively affected by external factors. It has an aging population with over 22 % over the age of 65, requiring an increased demand for governmental social services, and a  lack of space (241 Sq. miles vs. Cape May County’s 247 Sq. miles) . It is surrounded by water, removed from ground transportation routes , there is a critical shortage of potable water, and there are no natural resources to speak of.

Faced with a jobs and resources crisis, that government built two huge reservoirs and an oil refinery although you would never know it until you passed thru the gate. Then that entity turned itself into a green manufacturing center to provide jobs for its younger citizens and offered incentives (land and tax abatements ) for businesses that re-located to the community. The most significant difference is that Cape May County has approximately 96,000 residents, but has to support a more than 10 fold multiple of that number during the tourist season. The other entity now has over 5 million residents which has created a different set of problems. Other NJ Shore communities can make their own comparisons.

One of the original pillars of improvement , green manufacturing, has been drastically under cut by Chinese and ASEAN’s  cheaper labor pools. Accordingly the green manufacturing option closed years ago for the Shore areas. What is pertinent is that the politicians of that other entity recently changed course to make the finance industry a key part of the city’s revenue structure.  This was accomplished by making the local communications network one of the fastest in the world. It should not pass without noting that almost anywhere in another area , Japan, an internet user can get 61 megabit per second service. That is about 5 times faster than what is available here in the USA and not incidentally is far cheaper than the strangle hold offerings of US cable companies and telcos.  Please pay no attention to claims of more channels, the subject in question is speed and price. 

For that unnamed  political entity the principal communications company offers services of 6, 10, 15 and 25 mbs to residential users and higher speeds for businesses (approaching 100 mbs) and all tied to the world’s financial markets.

Such speeds allow a corporate executive to have the same capability in a home office as in the business workplace, with connections to a VPN (virtual proprietary network) and any financial trading market in the world. How many business executives  would give their eyeteeth to have that capability in Red Bank , Atlantic City, Ocean City or Cape May and skip the trip to NYC or Philadelphia ? 

The local wireless company provides free wireless service in the downtown area, and the speed of communications is why hedge funds and banks are leaving the USA and headed to Singapore.

Could any Shore community imitate Singapore ? The answer would depend solely on the will of the voting public after all it is not rocket science to build an internet system. At 15, 25 or 50 mbs any residence could drop the expensive cable or satellite services with their ever-increasingly expensive monthly bills and a shrinking list of offerings by using the internet to access local stations and cable program providers because they all now stream their programming. The other side of the coin is that the cable and satellite companies avoid carrying anything that is not a profit line. For instance in South Jersey the Dish Network does not carry CH. 40 (Atlantic City) which cannot afford the access charges, and one might note that Time Warner - a major cable company just dropped CBS from its line-up because of an argument about access fees.

Assuming a provision of 25 mbs, any resident could sit in his or her residence with secure instant communications and need only to commute to the office on days when there was a face to face client meeting. Usage possibilities are restricted only by the imagination and skills of the users.

There is a catch, none of the communication giants have indicated any willingness to accommodate that sort of speed at what can be considered a reasonable price. Why should they when users are willing to pay for substandard service using copper wire hanging from telephone poles?  So the next question is “Who could do it?” and the answer is a community that installs and operates its own internet service. This is a process called “bypass”, a name that was corporate anathema when this writer worked for the old Ma Bell. Cable/satellite execs now hate that word as much as the old phone company execs because “Bypass” means a loss of users and revenue. Before skeptics assert hogwash, google www.muninetworks.org  to see what other small communities are doing to reduce the expense and eliminate the aggravation of the communication giants. Then call your councilman because the first shore community  to do this will assure them selves of an improved municipality. The rest will be lost!